Tesla shares have been sliding in the aftermath of Trump becoming the US president-elect. Investors are worried about Trump's stance regarding the need for government incentives for the clean energy sector. GM and Toyota recently announced that they will soon launch mass-market Electric Vehicles (EV).

Ford and GM stocks were routed during the last two quarters of 2015, but are showing signs of recovery. The U. S. auto market itself has been close peak sales of 18 million cars per month. Based on current sales and Ford's success in Europe, the stock could make a stable addition to your portfolio.

Ford and GM are trading at historically low Price/Earnings multiples. They are also trading at a tiny fraction of their sales. GM though, has the stronger balance sheet and is a great play in this volatile market.

Traditional auto makers have been unable to challenge Tesla’s lead in the EV market at a time when Tesla is exclusively a high-end niche player. It’s only going to get murkier for them when Tesla starts lowering its sights.

Ford has announced it will invest $4.5B in electrified vehicle initiatives before the year 2020. There is little question that heavy investments in the EV space by the largest automakers can be unsettling for Tesla, widely considered to be the world’s most popular EV manufacturer.

So long as the CAFÉ standards for 2025, mandating average fleet mileage of 54.5 miles per gallon remain in place, pressure to produce more hybrids will remain in place and GM stock will remain under pressure because it just does not have what this market wants.

The company’s 15 cent/share dividend represents a yield of 4.12%, at its closing Tuesday price of $14.56. Even if the Federal Reserve raises interest rates by .25% later this month, it’s unlikely that 30-year bond rates will rise much beyond their current 2.91%.

Tesla’s ambition to grow bigger than GM, would not only have to involve the average cost of EVs becoming competitive enough with their gasoline-powered counterparts, but also a radical shift in consumer tastes.

Ford earnings missed estimates for the latest quarter. However, there are bigger issues that Ford (NYSE:F) needs to address, to restore investor confidence. Starting from attaining profitability in Europe to gaining market share outside North America, Ford has a lot to do to restore investor confidence.

RSI indicates that General Motors stock price is in oversold territory. The stock price has continued its upward march and has reached $37.3. Going forward the stock price faces heavy resistance around $38 level. The stock has tested $38 level twice last year and was unable to break above it.

The assets created by internet companies often don't find a place on a balance sheet leading to lower book value of equity. This leads to higher price to book value ratio for internet companies, which could lead to missing out on some good investments if seen in isolation.

Stock investing is largely about researching and understanding a company. Knowing when to invest, hold or buy is what makes an investor successful. Hence, it is critical to understand various warning signs in order to differentiate a good stock investment from a bad one.

Join Us On

Get Amigobulls On

Copyright2014 amigobulls.com

Historical, current end-of-day data, and company fundamental data provided by Zacks.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice.
Neither Amigobulls nor any of the data providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the amigobulls.com, you agree not to redistribute the information found therein.
Please read our terms of use and privacy policy.